Companies Act Valuation India 2026: Section 247, Registered Valuer & Transaction Checklist

A Companies Act valuation in India is not simply a DCF exercise. The first question is whether the transaction or corporate action requires a valuation under the Companies Act, 2013 and, if it does, whether the report must be issued by a registered valuer for the relevant asset class. This 2026 checklist explains the Section 247 framework, common transaction triggers, report discipline and the practical distinction between statutory valuation and management’s commercial valuation.

Companies Act valuation in India: the Section 247 framework

Section 247 provides the statutory architecture where valuation is required under the Companies Act. The Companies (Registered Valuers and Valuation) Rules, 2017 define a registered valuer as a valuer registered with the registration authority for the relevant class or classes of assets. IBBI is the registration authority under these Rules and maintains the registered-valuer ecosystem.

For securities and financial assets, the engagement should therefore begin with the legal trigger and asset class—not with a preferred spreadsheet method. A DCF, market multiple or other method may be technically appropriate, but the professional signing requirement and purpose of the report are separate questions.

When can a Companies Act valuation arise?

Valuation requirements appear across several corporate-action provisions rather than in Section 247 alone. Typical situations can include preferential issues or certain further issues of shares, schemes of arrangement, minority share purchases and other transactions where the Act or applicable rules expressly call for valuation. The exact provision, transaction structure and applicable rule must be checked before work begins.

Practical point: do not assume that every fundraising valuation, ESOP valuation, FEMA valuation or income-tax valuation is automatically a Section 247 valuation. One transaction can create multiple valuation questions under different laws, with different valuation dates, prescribed professionals or methods. The engagement letter and report should identify the precise purpose.

Registered valuer requirement and asset class

IBBI material describes three registered-valuer asset classes: Land and Building; Plant and Machinery; and Securities or Financial Assets. For an equity-share valuation, the relevant professional question is normally whether a registered valuer in Securities or Financial Assets is required by the specific Companies Act provision.

A chartered accountant may contribute financial analysis, forecasts, transaction diligence and modelling, but professional status should never be implied merely from CA membership. Where law requires an IBBI-registered valuer, the statutory report should be issued by an appropriately registered professional or entity.

2026 update: check the latest Valuation Rules before signing

IBBI’s official valuation-rules repository lists the Companies (Registered Valuers and Valuation) Amendment Rules, 2026 dated 1 June 2026. Because the regulatory framework can change, transaction teams should verify the current consolidated rules and the valuer’s live registration before relying on a report.

Valuation method: DCF, market approach or another technique?

The method should follow the nature of the business, purpose of valuation, information quality and reasonable professional judgment. DCF is often useful where forecast cash flows can be supported; market multiples can provide a market-based cross-check where genuinely comparable companies or transactions exist. Asset-based approaches can be relevant in asset-heavy or special situations. A method should not be chosen merely because it produces the desired number.

For DCF work, consistency matters: FCFF should ordinarily be discounted using a rate appropriate to enterprise cash flows, while FCFE should be matched with an equity discount rate. Terminal value, WACC, forecast margins, reinvestment and growth assumptions can drive a large share of the result and therefore require explicit sensitivity testing.

Worked mini-case: why the legal purpose changes the report

Assume an unlisted company is raising capital. Management’s negotiation model indicates an equity value of ₹120 crore using DCF and peer multiples. Before calling ₹120 crore the statutory fair value, the team should map the transaction to the Companies Act, applicable rules, FEMA and tax provisions. If a Companies Act provision requires a registered-valuer report, the independent valuer must determine the appropriate basis, valuation date, information relied upon, methods and conclusion. The commercial fundraising number can inform negotiations, but it should not be presented as a statutory valuation merely because the arithmetic is sophisticated.

What a robust valuation file should contain

A transaction-ready file should contain the engagement purpose and legal trigger; valuation date; capital structure and fully diluted share count; historical audited or reliable financial information; management forecasts and their approval trail; normalization adjustments; method-selection rationale; WACC or cost-of-equity support where applicable; comparable-company or transaction selection; terminal-value assumptions; sensitivity analysis; material limitations; source documents; and reconciliation from enterprise value to equity value and per-share value.

Common valuation mistakes and red flags

Frequent problems include using a fundraising headline valuation as statutory fair value; engaging the wrong asset-class professional; mixing valuation dates across inputs; treating management forecasts as facts without challenge; using peer multiples without comparability analysis; ignoring debt-like items or surplus cash; applying an aggressive terminal growth rate; double-counting control or marketability adjustments; and producing a report whose conclusion cannot be reproduced from the working papers.

Another red flag is regulatory mixing. Companies Act valuation, FEMA pricing, income-tax FMV, accounting fair value and transaction negotiation are not interchangeable labels. A good transaction team creates a compliance matrix showing each requirement, valuation date, professional requirement, method or standard, filing use and responsible adviser.

CFO checklist before commissioning a Companies Act valuation

1. Identify the exact corporate action and legal provision. 2. Confirm whether Section 247/Valuation Rules apply. 3. Confirm the required asset class and live registration. 4. Freeze the valuation date. 5. Reconcile the cap table and dilution instruments. 6. Prepare defensible forecasts and assumptions. 7. Separate statutory, FEMA, tax and commercial purposes. 8. Document related-party or conflict issues. 9. Build sensitivity and cross-checks. 10. Retain a data room that allows the conclusion to be reproduced and reviewed.

How this fits into transaction and IPO readiness

For fundraising, M&A and pre-IPO work, valuation quality depends on the same financial hygiene that supports due diligence: reliable historical numbers, reconciled cap tables, normalized earnings, supportable forecasts, related-party transparency and clear documentation. Valuation should therefore be coordinated with financial due diligence rather than treated as an isolated certificate at the end of a transaction.

FAQs

Who regulates registered valuers under the Companies Act framework? IBBI is the registration authority under the Companies (Registered Valuers and Valuation) Rules and maintains public registered-valuer information.

Is DCF compulsory for every Companies Act valuation? No. Method selection depends on the applicable legal framework, purpose, facts and professional judgment. The report should explain why the selected approach is appropriate.

Is every CA automatically a registered valuer? No. Registered-valuer status is a separate regulatory registration. The IBBI register should be checked where a statutory registered-valuer report is required.

Can the same valuation be used for Companies Act, FEMA and tax? Not automatically. The transaction may have different statutory purposes, dates, definitions and professional requirements. Each framework must be separately mapped before reliance.

What should a board challenge most closely? Forecast quality, method rationale, discount rate, terminal value, comparable selection, capital structure, adjustments, conflicts and whether the report actually answers the statutory purpose for which it was commissioned.

Practical takeaway

Companies Act valuation in India should begin with the legal trigger and professional requirement, then move to financial modelling. For CFOs and transaction teams, the strongest process is a documented compliance matrix plus a reproducible valuation file—not a single unexplained number. PGT & Associates can support transaction teams with financial modelling, valuation analysis, due-diligence readiness and coordination of corporate, tax and FEMA workstreams. Where a statutory registered-valuer opinion is required, the appropriate registered professional should issue that opinion.